Perusal of Section 34 (2) (a) of the Act reveals that Court may
set aside the award if the party making the application establishes on
the basis of record of arbitral tribunal, meaning thereby that Court
can certainly go for perusal of the record and therefore, requisition of
record from arbitral tribunal is not akin to remanding the matter to
arbitral tribunal but to ascertain the exact nature of dispute through
record of case. Therefore, case of the petitioner is not supported by
relevant provision itself. {Para 19}
20. Since it is not a case of remand per se, therefore, judgments
relied upon by the petitioner are not applicable in the present set of
facts. The Commercial Court is within a domain to call for the record
from arbitral tribulnal for deciding the application under Section 34
(1) and (4) of the Act.
HIGH COURT OF MADHYA PRADESH
BENCH AT GWALIOR
:SINGLE BENCH:
{HON'BLE SHRI JUSTICE ANAND PATHAK}
Writ Petition No.4895/2022
Anil Kumar Tripathi Through its proprietor Vs. Doorsanchar Nigam Ltd. (BSNL)
Present petition under Article 226 of the Constitution of India
has been preferred by petitioner/contractor being crestfallen by order
dated 6.1.2022 passed by Commercial Court, District Gwalior,
whereby learned Court below sought original record of arbitrator
before considering the application under Section 34 of the
Arbitration and Conciliation Act, 1996 (hereinafter referred as to 'the
Act') finally.
2. Precisely stated facts of the case are that petitioner is a
proprietor firm owned, managed and controlled by its proprietor Shri
Girish Chandra Dubey engaged in construction business as
contractor. Respondent-Bharat Sanchar Nigam Limited (B.S.N.L.) is
engaged as service provider in the field of telecommunication and is
instrumentally of such State within the meaning of Article 12 of the
Constitution of India.
3. It appears from the submissions and record that some contract
was given by respondent to petitioner for laying O.F.C. Cable but
petitioner could not complete the work within the stipulated time and
therefore, contract was cancelled vide order dated 8.7.2003 and
placed under blacklist. Matter went into arbitration and vide order
dated 9.5.2011 (Annexure P/1) Sole Contractor (Shri M.N. Singh,
General Manager Telecommunication (Retired) Bhopal) passed
arbitral award and partly allowed the claim of petitioner.
4. Being aggrieved by that, respondent preferred application for
setting aside arbitral award under Section 34 of the Act before the
Seventh Additional Sessions Judge, Gwalior. Vide order dated
30.11.2011, application under Section 34 of the Act was dismissed.
Thereafter, arbitration appeal under Section 37 of the Act was
preferred before Division Bench of this Court vide Arbitration
Appeal No.01/2012 (General Manager BSNL Vs. Anil Kumar
Tripathi). Vide order dated 22.04.2016, Division Bench of this
Court quashed the order dated 30.11.2011 passed by the Court below
and remitted the matter to the Court below for adjudication of the
objections preferred by the respondent in the application under
Section 34 of the Act by passing a speaking order.
5. Again matter was considered and vide order dated 18.10.2016,
learned Court below set aside the award dated 9.5.2011 passed by the
arbitrator and matter was remanded back to the arbitrator for
adjudication on the basis of documents and pleadings advanced by
the parties.
6. This time taking exception to the said order, petitioner
preferred an Arbitration Appeal No.3/2016 (Anil Kumar Tripathi Vs.
Mahaprabhandak, Doorsanchar Nigam Limited) before the Division
Bench of this Court and vide order dated 11.2.2019 considering the
judgment rendered by the Hon'ble Supreme Court in the case of
Kinnari Mullick and Another vs. Ghanshyam Das Damani, 2018
(11) SCC 328, in which earlier judgment of the Supreme Court
Mcdermott International Inc. Vs. Burn Standard Co. Ltd and
Others, 2006 (11) SCC 181, learned Division Bench of this Court
came to the conclusion that while deciding the application under
Section 34 of the Act, the Court below has no jurisdiction to remand
the matter to the arbitrator for afresh decision.
7. Therefore, impugned order of remand was set aside and while
restoring the proceedings under Section 34 of the Act before the
Court below with a direction to the Commercial Court to exercise the
jurisdiction/ discretion conferred under Sub-Section (4) of Section
34 of the Act and adjourn the proceedings for a period of time
determined by it in order to give the Arbitral Tribunal and an
opportunity to resume the arbitral proceedings or take such other
action as in the opinion of Arbitral Tribunal will eliminate the
grounds for setting aside the arbitral award.
8. Thereafter, matter got revived before Commercial Court and
proceedings are still pending. Many a time counsel sought time,
thereafter, shadow of Covid-19 pandemic loomed over court
proceedings and record was not available. Therefore, on 6.1.2022
Commercial Court directed for requisition of original record of
arbitrator before proceeding for final hearing for application under
Section 34 of the Act.
9. Being aggrieved by order dated 6.1.2022, whereby record has
been called, petitioner/contractor preferred this petition under Article
226/227 of the Constitution of India.
10. It is the submission of learned counsel for the petitioner that
matter is pending for a very long period before Commercial Court
and instead of deciding the case, Commercial Court asked for
original record of the arbitrator and therefore, effectively remanded
the matter back to the arbitrator and same is not permissible.
Therefore, this petition has been filed. Learned counsel for the
petitioner placed the order of the Supreme Court in the case of I-Pay
Clearing Services Private Limited vs. ICICI Bank Limited,
reported in 2022 (3) SCC 121 and submitted that learned
Commercial Court erred in calling the record as it amounts to
remanding the matter back to the Arbitral Tribunal. According to
him, learned Court below erred illegality and perversity.
11. Per contra, learned counsel for the respondent opposed the
prayer and submitted that only record has been called and remand
order is not being passed, therefore, no case for interference is made
out. According to him, learned Court below would consider the rival
submissions after requisition of record in original from Arbitral
Tribunal. He supported the impugned order.
12. Heard the learned counsel for the parties at length and perused
the documents appended thereto.
13. This is a case where petitioner/contractor is aggrieved by the
order dated 6.1.2022 passed by Commercial Court, Gwalior,
whereby record is being called for from Arbitral Tribunal at the time
of final hearing.
14. Grievance of petitioner as reflected in the submissions is that
the Commercial Court remitted the matter to the Arbitral Tribunal
which is not permissible as per the Section 34 (4) of the Act and the
judgment rendered by the Apex Court in the case of Kinnari
Mullick (supra) and ICICI Bank Limited (supra).
15. On close scrutiny, it appears that Commercial Court below has
not remitted the matter to the Arbitral Tribunal as per the Section 34
(4) of the Act, whereas in fact after revival of application under
Section 34 of the Act before the Commercial Court, direction was
given to the Court below to exercise the jurisdiction/discretion
conferred under sub-section 4 of Section 34 of the Act. Direction as
given by the learned Division Bench in its order dated 11.2.2019 in
Arbitration Appeal No.3/2016 is reproduced for ready reference:-
15. …..........................
Thus, being settled that, the Court while
deciding the petition under Section 34 of
1996 Act has no jurisdiction to remand the
matter to the Arbitrator for a fresh
decision; therefore, the impugned order to
the extent it set asides the award and
remand the matter to the 'Arbitrator' for
fresh decision, cannot be approved.
However, since the Trial Court was in
seisin with the petition under Section 34 of
1996 Act on its remand by order dated
22.04.2016 passed in A.A.No. 1/2012 for
adjudication on the objection afresh
preferred by the General Manager, BSNL.
And since the Trial Court formulated an
opinion that the said objection and the
cogent material whereon the objections
were raised were not considered by the
Arbitrator; therefore, while setting aside
the impugned order, the proceedings under
Section 34 of 1996 Act before the Trial
Court is restored with a direction to the
Trial Court to exercise the
jurisdiction/discretion conferred under
sub-section (4) of Section 34 of 1996 Act;
and adjourn the proceedings for a period
of time determined by it in order to give the
arbitral tribunal an opportunity to resume
the arbitral proceedings or to take such
other action as in the opinion of Arbitral
Tribunal will eliminate the ground for
setting aside the arbitral award. The
appeal is disposed of finally in above
terms. No costs.”
16. Therefore, apparently the Court below is trying to fathom the
controversy in correct perspective and trying to conclude it finally,
therefore, proceedings under Section 34 of the Act is still pending,
ergo, contention of petitioner that matter has been remanded back
does not hold ground. Only direction given in the impugned order is
sent for record or to requisition the record so that application under
Section 34 of the Act can be decided on its own merits. At this stage,
exemption regarding remand appears to be misplaced and an attempt
to pre-empt the controversy.
17. It is true that recent judgment of the Hon'ble Supreme Court in
the case of ICICI Bank Limited (supra), the Apex Court has given
guidance in following words regarding remand in paras 19 to 21 :-
19. As contended by learned senior counsel for
the appellant, it is true that Section 34 (4) of the
Act is couched in a language, similar to Article
34 (4) of the UNCITRAL Model Law on
International Commercial Arbitration. In the case
of AKN & Anr. v. ALC & Ors.4, by considering
legislative history of the Model Law, it was held
by Singapore Court of Appeals that remission is a
'curative alternative'. In the case of Kinnari
Mullick and Anr. v. Ghanshyam Das Damani,
relied on by learned senior counsel for the
appellant, the question which fell for
consideration was whether Section 34 (4) of the
Act empowers the Court to relegate the parties
before the Arbitral Tribunal after setting aside the
arbitral award, in absence of any application by
the parties. In fact, in the said judgment, it is held
that the quintessence for exercising power under
Section 34 (4) of the Act is to enable the Tribunal
to take such measures which can eliminate the
grounds for setting aside the arbitral award, by
curing the defects in the award. In the judgment
in the case of Dyna Technologies Pvt. Ltd. v.
Crompton Greaves Ltd., it was a case where
there was no inquiry under Section 34 (4) of the
Act and in the said case, this Court has held that
the legislative intention behind Section 34 (4) of
the Act, is to make the award enforceable, after
giving an opportunity to the Tribunal to undo the
curable defects. It was not a case of patent
illegality in the award, but deficiency in the
award due to lack of reasoning for a finding
which was already recorded in the award. In the
very same case, it is also clearly held that when
there is a complete perversity in the reasoning,
then the same is a ground to challenge the award
under Section 34 (1) of the Act. The case of Som
Datt Builders Limited v. State of Kerala is also a
case where no reasons are given for the finding
already recorded in the award, as such, this Court
held that in view of Section 34 (4) of the Act, the
High Court ought to have given Arbitral Tribunal
an opportunity to give reasons.
20. The aforesaid case law cited by the learned
counsel appearing for the appellant, is
distinguishable on facts and would not render any
assistance in this case. When it is the specific
case of the respondent that there is no finding at
all, on point no.1 viz. "whether the contract was
illegally and abruptly terminated by the
respondent?", remission under Section 34 (4) of
the Act, is not permissible. In our view, Section
34(4) of the Act, can be resorted to record reasons
on the finding already given in the award or to fill
up the gaps in the reasoning of the award. There
is a difference between 'finding' and 'reasons' as
pointed out by the learned senior counsel
appearing for the respondent in the judgment in
the case of Income Tax Officer, A Ward, Sitapur
v. Murlidhar Bhagwan Das. It is clear from the
aforesaid judgment that 'finding is a decision on
an issue'. Further, in the judgment in the case of
J. Ashoka v. University of Agricultural Sciences
and Ors., this Court has held that 'reasons are the
links between the materials on which certain
conclusions are based and the actual
conclusions'. In absence of any finding on point
no.1, as pleaded by the respondent and further, it
is their case that relevant material produced
before the Arbitrator to prove 'accord and
satisfaction' between the parties, is not
considered, and the same amounts to patent
illegality, such aspects are to be considered by the
Court itself. It cannot be said that it is a case
where additional reasons are to be given or gaps
in the reasoning, in absence of a finding on point
no.1 viz. "whether the contract was illegally and
abruptly terminated by the respondent?"
21. Further, Section 34 (4) of the Act itself
makes it clear that it is the discretion vested with
the Court for remitting the matter to Arbitral
Tribunal to give an opportunity to resume the
proceedings or not. The words "where it is
appropriate" itself indicate that it is the discretion
to be exercised by the Court, to remit the matter
when requested by a party. When application is
filed under Section 34 (4) of the Act, the same is
to be considered keeping in mind the grounds
raised in the application under Section 34 (1) of
the Act by the party, who has questioned the
award of the Arbitral Tribunal and the grounds
raised in the application filed under Section 34
(4) of the Act and the reply thereto. Merely
because an application is filed under Section 34
(4) of the Act by a party, it is not always
obligatory on the part of the Court to remit the
matter to Arbitral Tribunal. The discretionary
power conferred under Section 34 (4) of the Act,
is to be exercised where there is inadequate
reasoning or to fill up the gaps in the reasoning,
in support of the findings which are already
recorded in the award. Under guise of additional
reasons and filling up the gaps in the reasoning,
no award can be remitted to the Arbitrator, where
there are no findings on the contentious issues in
the award. If there are no findings on the
contentious issues in the award or if any findings
are recorded ignoring the material evidence on
record, the same are acceptable grounds for
setting aside the award itself. Under guise of
either additional reasons or filling up the gaps in
the reasoning, the power conferred on the Court
cannot be relegated to the Arbitrator. In absence
of any finding on contentious issue, no amount of
reasons can cure the defect in the award. A
harmonious reading of Section 31, 34 (1), 34 (2A)
and 34 (4) of the Arbitration and Conciliation
Act, 1996, make it clear that in appropriate cases,
on the request made by a party, Court can give an
opportunity to the arbitrator to resume the
arbitral proceedings for giving reasons or to fill
up the gaps in the reasoning in support of a
finding, which is already rendered in the award.
But at the same time, when it prima facie appears
that there is a patent illegality in the award itself,
by not recording a finding on a contentious issue,
in such cases, Court may not accede to the
request of a party for giving an opportunity to the
Arbitral Tribunal to resume the arbitral
proceedings. Further, as rightly contended by the
learned counsel appearing for the respondent,
that on the plea of 'accord and satisfaction' on
further consideration of evidence, which is
ignored earlier, even if the arbitral tribunal wants
to consciously hold that there was 'accord and
satisfaction' between the parties, it cannot do so
by altering the award itself, which he has already
passed.”
18. Now, if the guidance given by the Supreme Court is seen in
juxta position to Section 34 of the Act, then the very provisions
rendered the case of petitioner devoid of merit. Section 34 of the Act
is reproduced as under:-
34. Application for setting aside arbitral
award :-
(1) Recourse to a Court against an
arbitral award may be made only by an
application for setting aside such award
in accordance with sub-section (2) and
sub-section (3).
(2) An arbitral award may be set aside
by the Court only if—
(a) the party making the
application [establishes on the basis
of the record of the arbitral tribunal
that]-
(i) a party was under some
incapacity, or
(ii) the arbitration agreement
is not valid under the law to
which the parties have subjected
it or, failing any indication
thereon, under the law for the
time being in force; or
(iii) the party making the
application was not given
proper notice of the
appointment of an arbitrator or
of the arbitral proceedings or
was otherwise unable to present
his case; or
(iv) the arbitral award deals
with a dispute not contemplated
by or not falling within the
terms of the submission to
arbitration, or it contains
decisions on matters beyond the
scope of the submission to
arbitration;
Provided that, if the
decisions on matters submitted
to arbitration can be separated
from those not so submitted,
only that part of the arbitral
award which contains decisions
on matters not submitted to
arbitration may be set aside; or
(v) the composition of the
arbitral tribunal or the arbitral
procedure was not in
accordance with the agreement
of the parties, unless such
agreement was in conflict with a
provision of this Part from
which the parties cannot
derogate, or, failing such
agreement, was not in
accordance with this Part; or
(b) the Court finds that—
(i) the subject-matter of the
dispute is not capable of
settlement by arbitration under
the law for the time being in
force, or
(ii) the arbitral award is in
conflict with the public policy of
India.
[Explanation.1. —For the avoidance of any
doubt, it is clarified that that an award is in
conflict with the public policy of India, only if,-
(i) the making of the award
was induced or affected by
fraud or corruption or was in
violation of section 75 or
section 81; or
(ii) it is in conflict with the
most basic notions of morality
or justice]
[Explanation 2.- For the avoidance of doubt,
the test as to whether there is a contravention
with the fundamental policy of Indian law shall
not be entail a review on the merits of the
dispute.]
[(2A) An arbitral award arising out of
arbitrations other than international commercial
arbitrations, may also be set aside by the Court,
if the Court finds that the award is vitiated by
patent illegality appearing on the face of the
award.
Provided that an award shall not be set
aside merely on the ground of an erroneous
application of the law or by reappreciation of
evidence.
(3) An application for setting aside may not be
made after three months have elapsed from the
date on which the party making that application
had received the arbitral award or, if a request
had been made under section 33, from the date on
which that request had been disposed of by the
arbitral tribunal:
Provided that if the Court is satisfied that
the applicant was prevented by sufficient cause
from making the application within the said
period of three months it may entertain the
application within a further period of thirty days,
but not thereafter.
(4) On receipt of an application under subsection
(1), the Court may, where it is appropriate
and it is so requested by a party, adjourn the
proceedings for a period of time determined by it
in order to give the arbitral tribunal an
opportunity to resume the arbitral proceedings or
to take such other action as in the opinion of
arbitral tribunal will eliminate the grounds for
setting aside the arbitral award.
[(5) An application under this Section shall be
filed by a party only after issuing a prior notice
to the other party and such application shall be
accompanied by an affidavit by the applicant
endorsing compliance with the said requirement.]
[(6) An application under this section shall be
disposed of expeditiously, and in any event,
within a period of one year form the date on
which the notice referred to in sub-section (5) is
served upon the other party.]”
19. Perusal of Section 34 (2) (a) of the Act reveals that Court may
set aside the award if the party making the application establishes on
the basis of record of arbitral tribunal, meaning thereby that Court
can certainly go for perusal of the record and therefore, requisition of
record from arbitral tribunal is not akin to remanding the matter to
arbitral tribunal but to ascertain the exact nature of dispute through
record of case. Therefore, case of the petitioner is not supported by
relevant provision itself.
20. Since it is not a case of remand per se, therefore, judgments
relied upon by the petitioner are not applicable in the present set of
facts. The Commercial Court is within a domain to call for the record
from arbitral tribulnal for deciding the application under Section 34
(1) and (4) of the Act.
21. Resultantly, petition fails and is hereby dismissed.
(Anand Pathak)
Judge
AK/-
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